First of all, congrats davejh, you seem to be getting it now
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What I'm unclear on is who is going to pay to run mining hardware that takes insane amounts of power and can never ROI?
Whoever happens to still have a miner or mining operation. Keep in mind that as long as its operationally profitable, it doesnt make sense to turn off those machines, even though they may never ROI. And you will most likely see tons of those, in fact you already see them now, miners who will never make a BTC denominated profit, but keep mining to minimize the loss.
I buy that in the short term but that hardware will eventually die but there's no clear means to replace it if the ASIC vendors exit the market because no-one's buying what they're selling anymore.
Thus far the ASIC vendors haven't really had to think very hard about MTBF because the difficulty has obsoleted their products long before thermal stress does. Reducing frequency and voltage levels to reduce heat dissipation problems certainly helps that longer-term stability but only works if everyone does it. The problem is that if the difficulty is even inching upwards then there's no time like the present to push a mining ASIC as hard as possible.
Frankly if I didn't know better I'd think this was some insane game theory experiment :-) (A quick Google search revealed one or two interesting comments to the same effect)
As above, difficulty is not likely to ever drop (assuming constant BTC value), as that requires miners to actually be turned off. Thats never going to happen on a large scale. Once we approach the point of marginal profitability, ie, mining revenue is barely above electricity cost, sales/deployment will pretty much grind to a halt, but there is still an incentive to keep the existing infrastructure running.
I get back to the question of who's going to be left supplying infrastructure? Certainly at a point where things are saturated it would be very difficult to start a new company to do this (how would you fund it?).
